Wood chip-to-sugar maker scales up to replace oil and food crops

Low-cost cellulosic sugar maker Virdia has a new name, CEO and financing -- all the accouterments that signal plans to scale up commercially. And indeed, the company formerly known as HCL CleanTech, announced today a $75 million loan package with the Mississippi Development Authority to build biomass-to-sugar manufacturing plants in the state.

The five-year-old startup also announced it raised $20 million in venture capital from existing investors Khosla Ventures, Burril & Company and Tamar Ventures. In addition, Viridia closed $10 million in a venture debt deal with Triple Point Capital.

Virdia uses acid hydrolysis to convert cellulose found in biomass into fermentable sugars and lignin, a process the company says is more effective and cheaper than extracting sugar from corn or sugarcane. Acid hydrolysis isn't new. However, the company has improved upon the process by developing a way to recycle and reuse the acids and solvents used in manufacturing.

Cellulosic sugars (Virdia's end product) can be used to make renewable fuels including diesel and jet fuel; biochemicals; and nutritional additives such as baker's yeast and amino acids for the animal feed industry. Virdia's new CEO Philippe Lavielle (pictured above) told me yesterday the company plans to target all three of these markets.

Virdia already has customers for its cellulosic sugars including biofuel startups LS9 and Virent Energy. Lavielle said although the price points would differ depending on customer and target market, the sugars would be cost-competitive at current market prices.

Virdia's first plant will have capacity to make 150,000 tons of cellulosic sugars per year. Lavielle said. The company hasn't picked a location for the plant yet. It has agreed to locate the plant in Mississippi in exchange for a $75 million loan package and up to $155 million in various tax incentives over a 10-year period from the state.

Virdia hopes to begin construction on the first plant by the end of the year or beginning of 2013. Lavielle said he expects it will take two years to commission and build the plant. Virdia has already sold a third of the sugars that will be produced by this plant, Lavielle said, although he wouldn't identify the customers.

The company also has tentative plans to build a second plant with more than three times the capacity of the first refinery. A construction date and located has not been finalized and will largely depend on the success of the first plant.